Seller's Right to Withhold Delivery
- Reza Yassi
- Nov 25, 2024
- 1 min read
Updated: Apr 3, 2025
Protecting Your Business: Seller's Right to Withhold Delivery Under NY UCC
Sellers may face situations where delivering goods could result in financial loss, such as when a buyer becomes insolvent or fails to make payment. The New York UCC provides sellers with the right to withhold delivery under certain circumstances.
Understanding UCC §2-702: Seller's Remedies on Discovery of Buyer's Insolvency
Right to Withhold Delivery:
If the seller discovers the buyer is insolvent, they may refuse to deliver except for cash payment.
Right to Reclaim Goods:
If goods were delivered on credit while the buyer was insolvent, the seller may reclaim them within 10 days after receipt.
Other Relevant Provisions:
UCC §2-703:
Provides additional remedies if the buyer breaches, including withholding delivery or stopping delivery in transit.
Implications for Sellers:
Risk Mitigation:
Helps prevent losses from delivering goods without assurance of payment.
Legal Rights:
Allows for proactive steps to protect financial interests.
Best Practices:
Monitor Buyer's Financial Status:
Stay informed about the buyer's solvency and creditworthiness.
Prompt Action:
Exercise rights quickly upon discovering insolvency.
Communicate Clearly:
Notify the buyer of your intentions and conditions for delivery.
Key Takeaways:
Sellers have the right to withhold delivery under specific conditions.
Understanding and exercising these rights can prevent significant financial losses.
Proactive risk management is essential in commercial transactions.
Disclaimer:
This article is for informational purposes only and does not constitute legal advice. Although I am an attorney, I am not your attorney, and reading this article does not create an attorney-client relationship. For advice pertaining to your specific situation, please consult a qualified attorney licensed in your area.
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